Newhall's

SETTLEMENT OF ESTATES

AND

FIDUCIARY I.AW

IN MASSACHUSETTS

Thomas H. Belknap, Esq.

Fifth Edition

1998 (with 2014 Supplement

Section 36:33 — Termination of Trusts

And

Section 36:34 — Powers of Trustees after Termination

61

R LISTS AND TRUSTEES § 36:33

:%•faults by a gene I agreement of indeymity to a surety company which.‘..•coines surety both bonds." Succ ‘or trustees are not liable for the tor-•:...us conduct I their predecessors trust."

fhe tr tee's liability for ii n•oper investmentrhas been previouslydiscus d. In general the trt0e must acquaint h self with her duties andNarOe the trust with the line intelligence that -a reasonable person would

in the transaction o us own affairs. The.fact that the truste5Xandles the'Just to the best of r skill and ability will not excuse her she does not

ive the intellig, ce and skill that the ordinary, reasonapier person should

1:ive. liven a use in the trust instalment making the trustee liable only forilllisl and *ntentional breacheyof trust, which is a/frequent provisign'in

:rust inst intents, will not excuse the trustee from gross carelessnessin mat-./s.;:•rs of nvestments.31 ., ./. :

Some interesting conflict of laws questions can arise in mattets where dif--Jew states are involv'ed."

F. TERMINATION, ACCOUNTING AND DISTRIBUTION

36:33. Termination of Trusts

There are various methods by which trusts terminate.

A. Natural Termination

The first and most obvious method is by the trust coming to an end in ac-:ordance with the terms of the trust instrument when the purposes for whichwas established have been accomplished, as, for example, on the death ofto life tenant and the vesting of the estate in the remainder beneficiaries 3t In

29. American Sur,,Co. of New York.V. Vinton (1916);;24 Mass. 337, I I2 N.E.

30. Swenson„v: I lorgan (1960),341 Mass. 153. I6,7'N.E.2d 743.

31. See generally 36:17/ / ,//

32...See Harvey v. litligary Trust Co. (1938) 299 Mass. 457,13 N.E.2d 299r. As a comprp-.,ist(of a marital dispde in Ohio betweenbltio parties it was arranged that yirust fund for,the

nelit of two milioichildren be set upin Massachusetts, yfhe a MassachAetts trust, with thesets located ip/Massachusetts. The 'mother was the guardian of the children. The Ohio court,

s) proceedi9gi to which the trustee was not a party; awarded $25,500 counsel fecs to themother's aflorneys to be paid kY the trustee out of trust fund. The trustee refitted, and the.:tiorniqi brought stiit against' the trustee in Massachusetts. The loud sustained/the trustee on:qe,ground of lack ()findI:diction in the Ohio Court to make such a iudgment.,(Note: The case

an interesting one and there is much more to it than is repotted here.)

33. Angers v. Adams (1958) 337 Mass. 32S, 149 N.E.2d 389; Leonard v. Wheeler (1927)

:n1 Mass. 130, 158 N.E. 502; In re Stone (1885)138 Mass. 476; Morgan v. Moore (1855) 69Mass. 310.

153

§ 36:33 CHAPTER 36 TR

many cases it is a question of construction, to determine, first, the conditions Mi

on which the trust was to end, and, second, whether or not the conditions A blt

have been fulfilled."

ticpi

B. Revocation by Party Having the .Right to Revoke ccIe

A second method of termination is revocation by 'some party having a th

right to revoke the trust." The general rule is that a trust, even though volun-tary, if completely executed, cannot, in the absence of a power of revocationexpressly reserved, be revoked or set aside by the senior, except for mentalincapacity, fraud, mistake, or undue influence. In other words, a trust in

See also Hodge v. Mackintosh (1924) 248 Mass. 181, 143 N.E. 43, for an illustration.

34. Anderson v. Bean (1930) 272 Mass. 432, 172 N.E. 647, 72 A.L.R. 959 (trust to endwhen trustee retired from management of X Co., a Maine corporation; he reorganized it into aMassachusetts corporation; held, this did not terminate the trust);- Shea v. Maitland (1921)237 Mass. 221, 129 N.E. 399 (trust to pay income to A and B until they reached the age ofthirty, with no provision for the remainder; held, the trust came to an end when the survivorreached the required age).

See Eastwood v. Hayes (1934) 286 Mass. 508, 190 N.E. 796 (where the trustee had theright to convey the trust estate to the life tenant absolutely, on her request in writing; held, therequest did not have to be recorded); Cronan v. Cronan (1934) 286 Mass. 497, )90 N.E. 721(where a provision that the trustees might sell and distribute after ten years meant a termina-tion within a reasonable time after the ten years); Binney v. Attorney General (1927) 259Mass. 539, 156 N.E. 724 (trust fund to be distributed as testator's sisters may dictate; held.trust not terminated by their death); Turnbull v. Whitmore (1914) 218 Mass. 210, 105 N.E.861; Tudor v. Vail (1907) 195 Mass. 18, 80 N.E. 590 (trust to end on a certain settlement be-ing made for the widow, and she accepted a modification; held, trust terminated).

See also cases in the following section, § 36:34.

In the following cases it was held as a matter of construction that the trusts had notterminated:

Bradway v. Shattuck (1950) 325 Mass. 168, 89 N.E.2d 753 (condition that trusteesdetermine within three years tv healer it was expedient to establish homes for destituteconvalescents and for needy incurables: Young v. Jackson (1947) 321 Mass. 1, 71 N.E.2d 386(a trust to last during the life of the survivor of the grandchildren and until the youngest oftheir issue living at the death of such survivor reached 21 was held not to have ended on thedeath of' the surviving grandchild. there being more remote issue living who were minors).Taylor v. A lbree (1941) 309 Mass 248. 34 N.E.2d 601 (trust did not end until last of 12 an-nuitants died); Jones v. Jones i 1939) 304 Mass. 653, 24 N.E.2d 669 (trust to end "when saidtwo children arrive at the age of thirty-five years"; held, it did not end until both reached therequired age); I.ines v. Bank of New England. N. A. (US Dist Ct, D Mass, Civil Action No.85-46 I 5-MA--Slip Opinion, May 28. 19861 ("issue" means ''all lineal descendants").

35. In Trager v. Schwartz (1963) 3.15 Mass. 653, 189 N.E.2d 509, it was held that wherethere were no intervening rights of third parties, the provision of the trust making amend-ments and revocations effective "only upon being recorded" did not prevent the carrying outof an earlier amendment recorded after the recording of the revocation.

154

63

PTER 36

nditions

editions

aving a

volun-

location

• mental

trust in

tion.

1st to endd it into aId (1921)he age of; survivor

e had theheld, theN.E. 721

t termina-927) 259ate; held,105 N.E.

.invent be-

3 had not

t trusteesdestitute.13.2d 386ungest ofled on theminors);of 12 an-Alen saidached thectiott No.:s'

iat whereg amend-rrying out

TRUSTS AND TRUSTEES § 36:33

Massachusetts is irrevocable unless it is clearly provided that it is revoca-

ble."

The existence and tenns of a power of revocation are a matter of construc-

tion.' A provision that the trustee shall pay the settlor the income and such

portion of the principal as the settlor shall deem necessary for the senior's

comfort and support is not a power of revocation, and the settlor cannot

terminate the trust by demanding the whole of the principal under a claim

that she needs it for her comfort and support, when she does not intend to

use it for that purpose.37 An unrestricted power of amendment may, however,

be used to effect a revocation.38

36. Barnum v. Fay (1946) 320 Mass. 177, 69 N.E.2d 470; Gorey v. Guarente (1939) 303

Mass. 569, 22 N.E.2d 99; James v. James (1927) 260 Mass. 19, 156 N.E. 745; Thorp v. Lund

(1917) 227 Mass. 474, 116 N.E. 946; Loring v. Wilson (1899) 174 Mass. 132, 54 N.E. 502;

Lovett v. Farnham (1897) 169 Mass. 1, 47 N.E. 246; Keyes v. Carleton (1886) 141 Mass. 45.

6 N.E. 524; Seamans v. Gibbs (1882) 132 Mass. 239; Viney v. Abbott (1872) 109 Mass. 300.

As to the rescission of trusts, generally, see § 36:2.

As to the amendment or reformation of trusts, generally, see § 36:3.

As to the revocation of so-called savings bank trusts, see § 36:2.

As to the revocation of revocable trusts. see § 38:4.

See Coolidge v. Loring (1920) 235 Mass, 220, 126 N.E. 276, for an unsuccessful attempt to

reform a trust instrument by inserting a power of revocation.

In Marken v. Sidney B. Pfeifer Foundation, Inc, (1980) 9 Mass. App. 412, 402 N.E.2d 76,

it was held that the combination of the donor's unawareness that the trust was irrevocable and

the breach of fiduciary duty by her nephew, the principal beneficiary and heir, made the trust

vulnerable to the donor's rescission. The case contains a long discussion of the requirements

of a rescission by mistake.

See also Marshall v. Marshall (1980) 10 Mass. App 893, 409 N.E.2d 1322 (rescript), in

which a deed was rescinded on the grounds that the purported grantor was acting under the

undue influence of her son and that she never intended to convey the property in question.

However, see Bruno v. Bruno (1980) I0 Mass. App. 918, 411 N.E.2d 1324, app. decided

(1981) 384 Mass. 3 I, 422 N.E.2d 1369, where there was insufficient evidence to show undue

influence, and the fact that the grantor did not understand the consequences of tier signature

on the deed was insufficient to rescind it.

See also Russell v. Russell (1984) 18 Mass. App. 957, 468 N.E.2d 1104, review den. (1984)

393 Mass. 1104, 471 N.E.2d 1355 (rescript).

The I..and Court refused to issue a new certificate of title in the name of the plaintiff as

trustee in Blake v. Rhone (1987) Massachusetts Land Court Case No. 3378-S, 15 M.L.W.

2135, where the grantor at the time she signed the deed and trust lacked the mental capacity to

understand the significance of the document she executed.

In Manley v. Adgurson (1992) Land Court, Middlesex County, Misc. Docket No. 133803,

20 M.I.,. W. 2013, a trustee's attempt to convey the trust's real property to herself for no

consideration was held invalid because the trustee had not reserved the power to amend or

revoke and she ignored the trust provisions that created rights in the other beneficiaries.

37. Lovett v. Farnham (1897) 169 Mass. 1, 47 N.E. 246.

166

64

§ 36:33 CHAPTER 36

C. Termination by Decree ofrourf

Another method for terminating a trust is by a decree of the court based onthe agreement of all parties interested." It would seem at first thought that ifall the interests in a trust are vested, and all the parties, including the trustee,desire the trust to be terminated, the court would give effect to their wishes.

Massachusetts law, however, does not go that far," although it does permittermination in some cases.

One statement of the Massachusetts rule frequently seen in the opinions isthat where property is given in trust for the benefit of a certain person orpersons, with no limitation over, and in such a manner that no other personcan have any beneficial interest in it, the trustees may in equity he decreed totransfer and convey such property, freed from any trust, to the parties benefi-

38. Scott v. Dane (1964) 346 Mass. 784, 196 N.E.2d 195; Stabler v. Seviitor ( 1949) 324Mass. 18, 84 N.E.2d 447.

Suppose the donor of the trust has retained the income for her life and a generaltesta.meruary power of appointment and has left the remainder in default of appointment to is-sue. May she revoke the trust? She has retained control of all beneficial interests. She mayalienate the income interests whether or not there is a spendthrift clause. See § 36:38. Shemay cut off the interests in remainder by the exercise of her own power of appointment. Thetrend of the Massachusetts cases appears to be toward permitting revocation in such a case.See New England Merchants Nat. Bank of Boston v. Kann (1973) 363 Mass. 425, 294 N.E.2d390; Ware v. Gulda (19.54) 331 Mass. 68, 117 N.E.2d 137. In the Kann case, the court ap-pears to sanction the making of equitable adjustments by agreement of all parties in interest(although the failure of the charitable remaindermen to agree prevented the court from sodeciding). In the Ware case, the rule established by Crawford v. Langmaid (1898) 171 Mass.309. 50 N.E. 606, under which creditors were denied the right to reach trust interests payablein the discretion of the trustees to the donor-debtor, was overruled. It is difficult to concludethat anyone other than the donor in the above hypothetical case would have any real interestin the trust property.

In State Street Bank and Trust Co. v. U.S., by I.R.S. (D. Mass. 1990) 729 F.Supp. 1402, thecourt refused to enjoin the Internal R.evenue Service from levying on trust assets to satisfy thedonor's personal income tax deficiencies, where the donor had retained the right to direct pay-ment of current income to himself and where the donor's son. as cotrustee with the donor, hadthe power to direct the payment of principal.

39. Generally, see 76 Am Jur 2d, Trusts § 78 et seq.

40, The so-called American rule prevails in Massachusetts, started by ('Input v. Claflin(1889) 149 Mass. 19, 20 N.E. 454. as distinct from the English rule, which is much more lib-eral in the matter of termination. See Loring, §§ 3.5.3.2(k): 8.2.2, for a general discussion.For good general discussions of the subject see Flelvering v. lielmholz. (1935) 296 U.S. 93, 56S.Ct. 68, 80 LE& 76; Restatement of Law, Trusts, §§ 337, 338.

See Franklin Foundation v. Attorney General (1960) 340 Mass. 197, 16.3 N.E.2d 662.

ln Budin v. Levy (1962) 343 Mass. 644, 180 N.E.2r174, a trust was terminated on the basisof a compromise agreement signed by all interested parties. Even where there are unascer-mined interests, there would seem to be no reason why a trust could not be terminated underthe compromise statute provided there is a question or controversy and the compromiseagreement is just and reasonable. See §§ 2:7 and 3:12.

156

TRusTs

Qially intowhole NI

In anyhave becities, inch.of the trucase, wht:

41. Sean

See to it122 N.E. 5ble estates.beneficiarWhall v. (\iass. 303Mass. 575.parries sou

TIIIIS,

that the Cu( 1911) 21k.to 13 to ke.127). Butincome dov. Willard

42. San(1890) 15:Andrew

The intterminaticson (1923tr as on ge

West v

affirmed rthe panic::crnuinuanport of th,achieved.merged vprovisioninterests

See Pa

43. RoNat. Bantrust to p.the princ•and then

See al:N.E. 953

65

CI I APTIA 36

court based onthought that if

ling the trustee,to their wishes.t it does permit

t the opinions is

Ttain person or

no other person

tv be decreed to

e parties bencti-

Sevinor (1949) 324

:ife and a general.ippointmeni to is-

i interests. She may.e. See § .16:38. She:If: appointment. Theanon in such a case.ass. 425, 294 N.E.2dcase, the court np-

.ill parties in interest;d the court front soud (1898) 171 Mass.

interests payabledifficult to concludeia‘e any real interest

2,-) ,Snpp. 4402.theassets to satisfy thec right to direct pay-

dh the donor, had

ON- Clallin v. Claninnett is much more jib-

General discussion.1135)196 U.S. 93, 5o

lo3 N.E.2t1 662.

ermiriated on the basis:ere there are tinascer-,a be terniinated under

.:in,) the compromise

TRUSTS AND TRUSTEES § 36:33

cially interested." This, however, is a somewhat too narrow statement of thewhole Massachusetts doctrine.

In any proper case, where the court deems that the purposes of the tntsthave been accomplished, and where the interests are all vested and all par-ties, including the trustee, have assented, the court: will decree a terminationof the trust." All parties interested must assent, however." Also, in a propercase, where a trust becomes impossible of fulfilment, the court may decree a

41. Sears v. Choate (1888) 146 Mass. 395, 15 N.E. 786 (the leading case).

See to the same effect Williams v. Young Men's Christian Ass'n (1919) 232 Mass. 472.122 N.E. 570; C.'unningliam v. Bright (1917) 228 Mass. 385, 117 N.E. 909 (legal and equita-ble estates merged in beneficiary); Langley v. Conlan (1912) 212 Mass. 135, 98 N.E. 1064{beneficiary the only party interested); In re Thurston (1891) 154 Mass. 596, 29 N.E. 53;WWII v. Converse (1888) 146 Mass. 345, 349, 15 N.E, 660: Slater v. Hurlbut (1888) 146Mass. 308, 315, 15 N.E. 790; In re Stone (1885) 138 Mass. 476; Inches v. Hill (1871) 106Mass. 575, 578; Smith v. Harrington (1862) 86 Mass. 566 (where the court intimated that theparties could act directly, without going to court).

Thus, where a speciffi: amount is bequeathed to purchase art annuity for A, he may demandthat the fund be paid directly to hint. without the purchase of the annuity (Parker v. Cobe(1911) 208 Mass. 260. 94 N.E. 476, discussed in § 25:11, note 33: or where A delivers moneyto 13 to keep for her and B dies, A can demand the money (Farreliy v. Ladd (1865) 92 Mass.1271. But a beneficiary who has only a life estate and a testamentary power to dispose of theincome does not have such a complete interest as to enable him to demand a conveyance. Sisev. Willard (1895) 164 Mass. 48,41 N.E. 116.

42. Sands v, Old Colony Trust Co. (1907) 195 Mass. 575, 81 N.E. 300: Gannon v. Ruffin(1890) 151 Mass. 204. 207, 24 N.E. 37; In re Stone (1885) 138 Mass. 476; Bowditclt v,Andrew (1864) 90 Mass. 339: Smith v. 1 larrington (1862) 86 Mass. 566.

The interests must all be vested. If there are any contingent interests there can be notermination. Conant v. St. John ( 919) 233 Mass. 547. 124 N.E. 486. Sec also Phipps v. Bos-son (1923) 244 Mass. 361, 138 N.ts. 573, where this was the situation, although the decisionwas on general grounds.

West v. Third Nat. Bank of Ilarnpden County (1981) 11 Mass. App. 577, 417 N.E.2d 991,affirmed the cases cited above by holding that the termination of a trust based on agi eement ofthe parties requires that all interests be vested and that there be a determination that the trust'scontinuance is no longer necessary to carry out its purposes. The court held, first, that the sup-port oldie life income beneficiary etas a major purpose of the testator which had not yet beenachieved. Secondly, the court held that the interests of the remainder beneficiaries had notmerged with those of the life income bencliciaty, as she argued, even though there was noprovision as to the distribution of the principal on her death without surviving issue. Thus, allinterests were not vested.

See Papale-Keefe v. Altomare ( 1995) 38 Mass. App. 308, 647 N.E.2d 722.

43, Rowland v. June (1951) 327 Mass. 455, 99 N.E.2t1283 (trustee objected); Allen v. FirstNat. Bank and -trust Co. of Greenfield ( 1946) 319 Mass. 693. 67 N.E.2d 472 (involving atrust to pay the income to A during "the full term of her natural life," and on her death to pay;he principal to her children, where A filed a petition to terminate, assented to by her children,.and the trustee opposed).

See also to the same effect Hoffman v. New England Trust Co. (1905) 187 Mass. 205, 72E. 952: Wirth v. Wirth (1903) 183 Mass. 527, 67 N.E. 657 (one of the parties a minor);

157

66

§ 36:33 CI-IA PIER 36 I RUSTS AND TR1

termination:" And in the event of the complete frustration of its purpose itwill be terminated.'

Further than the above, the Massachusetts court will not go. When thequestion of following the English rule first came up here, in a case where thetestator directed that the principal should be held in trust until the beneficiaryreached the age of 30, the court reffised to follow it, holding that the testator'swishes should prevail, and that the trust could not be terininated.4° Following

Barbour v. Wcld ( (909) 201 Mass. 513, 87 N.E. 909; In re Thurston (1891) 154 Mass. 596,29 N.E. 53; Seamans v. Gibbs (1882) 132 Mass. 239.

For a peculiar case see Markus v. Markus (1954) 331 Mass. 394, 119 N.E.2d 415.

In New England Merchants Nat, Bank of Boston v. Kann (1973) 363 Mass. 425, 294 N.E.2d390, it was conceded that in the absence of agreement by all parties in interest, a trust couldnot be modified.

44. Gordon v. Gordon (1955) 332 Mass. 193, 124 N.E.2d 226. In this case there was adevise of a home in trust for the benefit of the six children of the testatrix, each of whom hadthe right to live there. Finally friction developed, making the joint occupation impracticableand the court terminated the trust,

But the Legislature does not have the power to terminate a .trust. See Franklin Foundationv. Attorney General (1960) 340 Mass. 197, 163 N.E.2d 662.

The Supreme Judicial Court held in ()pillion of the Justices to the House of Representatives(1978) 374 Mass. 843, 371 N.E.2d 1349 that a second attempt by the legislature in 1977 toterminate the trust under the will of Benjamin Franklin would have been an unconstitutionalapplication of the doctrine of cy pres.

In Clymer v. Mayo (1985) 393 Mass. 754, 473 N.E.2d 1084, a marital deduction trust thatwas directed by the trust instrument to be funded for the benefit of the donor's husband at herdeath was held to have been properly terminated upon the probate court's finding that itspurpose, which was to qualify the bequest to the trust for the estate tax marital deduction,became impossible to achieve as a result of the divorce of the donor from her husband. TheSupreme Judicial Court added to its affirmation of the probate court's reasoning the holdingthat. in the particular facts of the case—"specifically the existence of a[n unfunded] revoca-ble pour-over trust . . ."---the husband's interest in the trust was revoked by the divorceunder the provisions of GI. c 191, § 9.

45, Selig v. Wexler (1969) 355 Mass. 671, 247 N.E.2d 567. The court pointed out thatimpossibility and frustration are somewhat akin but are not precisely the same. In the case, avoting trust had been established by two equal owners of a business for the purpose of provid-ing stability of management and harmony through neutral trustees and directors. The frustra-tion occurred from the lack of neutrality of the trustees and the improbability of their agreeingon neutral directors. The court concluded that the procedure could not have been carried outas intended and the purposes of the trust were accordingly frustrated.

46. Clafiin v. Claflin (1889) 149 Mass. 19, 20 N.E. 454, followed later in the somewhatsimilar case of Dunn v. Dobson (1908) 198 Mass. 142, 84 N.E. 327. See also to the same ef-fect Watson v. Watson (1916) 223 Mass. 425, I 1 1 N.E. 904 (where the will expresslyprovided that the beneficiaries should have the income only, but the remainder went to themas undisposed of property); Phipps v. Bosson (1923) 244 Mass. 361, 138 N.E. 573 (where thetrust was to last for ten years).

Conversely, in Towle v. Delano (1887) 144 Mass. 95, 10 N.E. 769, discussed in Commis-sioner of Corporations and Taxation v. Bullard (1943) 313 Mass. 72, 46 N.E.2d 557, 146

158

this decision thetermination of aperform and the tmance, even thoutition.41

The 1974 caserule. There, the son his death. Thefor education, coup to one-half ofCourt concludedinstrument, therewas whether, battrustees could priIt was found thatthe assets, and thto compel its terrties nor the vestii

By implicatiodiscretionary pccontinue." Like,income," Or if itcourt will refuse

In order to ernsmall trusts, thconsolidation ortary or inter vivo

A.L.R.. 772, the cowwill, although A war

47. Rowland v. JL

Young v. Snow (1

Danahy v. Noona

See also Forbes vMass. 547, 124 N.E

48. Atwood v. Fir

49. Russell v. Gri

Damon v. Damora trust to pay the idetermine to A andbut the court reibset

50. Boyden v. Ste

67

CHAPTER 36 TRUSTS AND TRUSTEES § 36:33

n of its purpose it this decision the court has held in substance that it will not decree thetermination of a trust in any -case where the trustee has active duties to

not go. When the perform and the terms of the trust are not unlawful or impossible of perfor-

n a case where the mance, even though all the interests are vested and all parties join in the pe-

ntil the beneficiary titian."

that the testator's The 1974 case of Atwood v. First National Bank may have modified thisnated." Following rule. There, the sole income beneficiary had the power to appoint principal

on his death. The Trustees had discretion to pay principal to the beneficiary1891) 154 Mass. 596,

for education, comfort and support, and had separate authority to distribute

N.E.2d 415. up to one-half of the principal to the beneficiary "if they deem it wise." The

lass. 425, 294 N.E2d Court concluded that termination would be required if, under the governing

interest, a trust could instrument, there was no lawful alternative to termination. The narrow issuewas whether, based on the testator's intention as expressed in the will, the

this case there was a trustees could properly exercise discretion not to distribute all the principal.

rix, each of whom had It was found that the beneficiary had no absolute right to a distribution of all,upation impracticable the assets, and thus, the "purposes of the trust have not been achieved so as

to compel its termination". There was no discussion of the assent of the par-e Franklin Foundation ties nor the vesting of interests.

use of Representatives By implication, the crucial issue is whether, based on the granting of

legislature in 1977 to discretionary powers to the trustee, the testator intended the Trust toen an unconstitutional continue." Likewise, if the trustee has discretion in the application of the

income," or if it is a spendthrift trust with a restraint against alienation," theEal deduction trust that court will refuse to terminate it.onor's husband at her

.ourts finding that its In order to enable trustees to more economically and efficiently deal withtax marital deduction, small trusts, the Legislature in 1986 enacted a statute permitting the"Kiln her husband. The consolidation or termination and distribution ofproperty held in a testamen-reasoning the holdinga[ti unfunded] revoca- tary or inter vivos trust if, after notice to all interested parties, the court finds:yoked by the divorce

A.L.R. 772, the court insisted on setting up a trust fund for the issue of A, as called for by thewill, although A was 53 years old and a confirmed bachelor.

court pointed out thathe same. In the case, a 47. Rowland v. June (1951) 327 Mass. 455, 99 N.E.2d 283;

the purpose of provid- Young v. Snow (1897) 167 Mass. 287, 45 N.E. 686 (the leading case);directors. The frustra- Danahy v. Noonan (1900) 176 Mass. 467, 57 N.E. 679 (trust for education of beneficiary).

ibility of their agreeingt have been carried out See also Forbes v, Snow (1923) 245 Mass. 85, 140 N.E. 418; Conant v. St. John (1919) 233

Mass. 547, 124 N.E. 486; Seamans v. Gibbs (1882) 132 Mass. 239.

later in the somewhat 48. Atwood v. First Nat. Bank of Boston (1974) 366 Mass. 519, 320 N.E.2d 873.

See also to the carne ef- 49. Russell v. Grinnell (1870) 105 Mass. 425;sere the will expressly-ernainder went to them Damon v. Damon (1942) 312 Mass. 268.44 N.E.2d 657, 143 A.L.R. 463 (where there was

38 N.E. 573 (where the a trust to pay the income, and such portions or all of the principal us the trustee shoulddetermine to A and no one else had any rights in the trust, and A sought to terminate the trust,

but the court refused on the ground that the trustee had discretionary power).

50. Boyden v. Stevens (1934) 285 Mass. 176, 188 N.E. 741.discussed in COMITI1S-

72. 46 N.E.2d 557, 146159

68

§ 36:33 CI IAPTER 36

that the continuance of the 1111S1 W011id be uneconomical OF that it woulddefeat or substantially impair the purposes of the trust. 'The court may ordersuch termination regardless of any spendthrift or other similar protective

provision.The proceeding may be initiated by petition brought either by the trustees

or by any other interested party; if more than one petition is brought for the

termination of a single trust, the cases may be consolidated. Once the

proceeding is initiated, the court may make such disposition of the trust

property as it deems proper or necessary to protect the interests of the bene-

ficiaries and the trustees; but the intention Of the senior or testator must bekept in mind. In all cases, the specific provisions of the instrument creatingthe trust will control."

D. Partial Termination

The court will, in a proper case, terminate the trust in part and continue it

in part, where a portion of the trust has been accomplished, and the partial

termination can be made without injury to the balance.52 The court is some-what more liberal in permitting partial termination. Thus, where the trust

was to pay the income to the testator's daughters in equal shares, with

remainders to their issue as to the principal, it was also provided that if any

daughter left a husband she could provide for an annuity for him not exceed-

ing one-third of her share of the income. One daughter did so provide, and

the court held that the trust could be terminated as to the other two-thirds ofher share, leaving one-third in trust to take care of the annuity."

On the other hand, in a case where the income was payable in fixed

amounts to 1 I annuitants, the principal to be divided on the death of the lastannuitant, the court refused to decree a partial termination when eight of the

annuitants had died." This decision was followed in another case,55 but in a

later case, where the income was about five times the remaining annuities,

51. GI. c 203, 25.

Uniform Practice XXXIV provides that the Attorney flown' must be made a necessary

party, with proper notice, in the event of a petition by a fiduciary for authority to consolidateor terminate a trust pursuant to Cif, c 203, § 25, or otherwise, such that a charitable interest

would be affected.

52. Welch v. Trustees of Episcopal Theological School (1905) 189 Mass. 108, 75 N.E. 139

(where the trust was divided by the testator into two portions, m o-thirds and one-third

respectively); Williams v. Timelier (1904) 186 Mass. 293, 71 N.E. 567 (where a definite por-tion of the trust was subject to a life estate).

53. Ames v. Hall (1943) 313 h4ass. 33, 46 N.E.2d 403.

See Clymer v. Mayo (1985) 393 Mass. 754, 473 N.E.2d 1084.

54. Abbott v. Williams (1929) 268 Mass. 275, 167 N.E. 357.

160

Tit usTs AND TR t.

the court upheld tincome to be paid

As in the case ointerest must join

E. Term i.

The next questicis, lithe interests atrust on such terms'The court has vacipositively what is t

In Partridge v. (lion, there was a trthe son. By agreemto the widow and tto the executors. Atheir account and rfrom a decree allow(acting in flits casedren of the son hadrelease under sea1.5tas the court called iThe beneficiaries into deny the termina-

Some years laterTrusts, went a littlelife estate to A, witsignment, A and 13

See New England MN.E.2d 390, where a codenied. The main issue

55. Springfield Safe E

56. Springfield Safe

57. See above, notes 4

58. Partridge v. Clary

59. See also Matthewwith the consent or the b

60. Conant v: St. John

69

C..1 APTER 36

or that it woulde court may order,imilar protective

ter by the trusteesis brought for theidated. Once the;ition of the trust!rests of the bette-r testator must bestrument creating

trt and continue it•d. and the partialhe court is some-;, where the trustThal shares, withovided that if anyr him not exceed-d so provide, andther two-thirds ofMy."

payable in fixede death of the lastwhen eight of the.er case,55 but in araining annuities,

be made. a necessarythorny to consolidate

charitable interest

ass. 108, 75 N.1. 139•thirds and one-thirdwhere a definite por-

TRUSTS AND TRUSTEES § 36:33

the court upheld the arrangement of the parties and permitted the surplusincome to be paid to the ultimate remainderman."

As in the case of complete termination previously discussed all parties ininterest must join and the interests must all be vested."

E. Termination hr the Parties Themselves. Without CourtProceedings

The next question is whether or not the parties may ignore the court. That

is, if the interests are all vested and all parties agree, may they terminate thetrust on such tertns as are mutually agreed upon without court proceedings?The court has vacillated somewhat on this point, so that it is difficult to say

positively what is the present law:

In Partridge v. Clary," the first case which squarely presented this ques-tion, there was a trust for the testator's widow and son, with a remainder tothe son. By agreement the parties divided the estate, approximately one-thirdto the widow and two-thirds to the son, both giving full releases under sealto the executors. After the death of the widow and son the executors tiledtheir account and presented the releases. The children of the son appealedfront a decree allowing the accounts. The court held that while the executors

(acting in this case as trustees) had no right to terminate the trust, the chil-dren of the son had no standing to object, as they were bound by their father'srelease under seal." In other words, the "untimely termination of the trust,"

as the court called it, was improper, but there was no one who could object.

The beneficiaries may put themselves in a position where they are estopped

to deny the termination of the trust.°

Seine years later the court, apparently influenced by the Restatement ofTrusts, went a little further in the same direction, saying that where there is alife estate to A, with a vested remainder in B, with no provision against as-signment, A and B acting together may compel the termination of the trust,

See New England Merchants Nat. Bank of Boston v. Kann (1973) 363 Mass. 425, 294N J3.1.1 390, where a counterclaim for partial distribution in a similar factual situation wasdenied. The main issue was not reached since the claimants had refused to act equitably.

55. Springfield Safe Deposit & Trust Co. v. Friele (1939) 304 Mass. 224, 23 N.E.2d 138.

56. Springfield Safe Deposit & Trust Co. v. Stoop (1950)326 Mass. 363, 95 N.E.2d 161.

57. See above, notes 42, 43.

58. Partridge v. Clary (1917) 228 Mass. 290, 117 N.E. 332.

59. See also Matthews v. Thompson (1904) 186 Mass. 14, 71 N.E. 93, where the trusteeswith the consent of the beneficiaries conveyed the trust estate to the settior.

60. Conant v. St. John ( 1919) 233 Mass. 547, 124 N.E. 486.161

70

§ 36:33 CHAPTER 36 TRUSTS AND TI

and by setting up a new one may modify the old, without any clause in the

trust permitting it.°The complete

A few years later, in Whitney v. Whitney,62 the court apparently had achange of heart, placing a very narrow interpretation on Partridge v. Clary.

same person ten

A testatrix devised land in trust for her daughter, E, for life and on her death interest must be

to the testatrix's three sons, A, B, and C. A and B were executors and trust- A trustee camees, with a power of sale. All parties joined in a deed to Y, the father of E, A trustee who hasand B signing in all three capacities. The purpose of the transaction was to terminate the fruenable Y to take care of E, who was a cripple, and the only consideration ciary, when the twas a mortgage by Y to A, B and C, due on Y's death, without interest. The bona fide exerciscourt held the whole transaction void. It is difficult to reconcile this case withPartridge v. Clary, and the tone of the opinion was a definite warning against

The question

"untimely" terminations. in a later section

In the next swing of the pendulum the court seemed to swing back to65. Cunningham •

Partridge v. Clary. The ease was similar to that case in that there was a life 212 Mass. 135, 98 I%estate followed by vested remainders. The court, citing Commissioner ofCorporations and Taxation v. Second National Bank of Boston, " and ignor-

66. Tifft v. trelan<

ing Whitney v. Whitney, held that the parties could have terminated the trust The rules pertain:support of an indivic

by joining together.64 Nat. Bank of Hampc

As a result of these cases presumably Partridge v. Clary is still the law and 67. In Atkins v. ;Whitney v. Whitney would be confined to its own set of facts, btit this can- funds become so minot be stated positively. and identify them a:

however, that the c

61. Commissioner of Corporations arid Taxation v. Second Nat. Bank of Boston (1941) insolvency cases.

308 Mass. I , 30 N.E.2d 889. A trust cannot be

The proposition that a trust instrument may be amended by a unanimous vote of all 428.

shareholders was referred to in Richardson v. Clarke (1977) 372 Mass. 859, 364 N.E.2d 804. In Boston Safe

In Papale-Keefe v. Altornare (1995) 38 Mass. App. 308, 647 N.E.2d 722, the holder of all Court Civil Action

the outstanding shares of a Massachusetts business trust was permitted to terminate the trust property from the tr

prior to its scheduled date of termination without the power to do so being reserved in the or consent of the co

trust instrumentand against the objection of the sole trustee. The court held that the traditional of what was require

trust principles relating to termination of trusts are applicable to Massachusetts business merit directing that t

trusts, citing State Street Trust Co. v. Hall (1942) 311 Mass. 299, 41 N.E.2d 30, 156 A.L.R. conduct of the parti,

13. had ended, thus tensignificant or positi,

In Minkin v. Commissioner of Revenue (1997) 425 Mass. 174, a case involving capital citing Hill v. Hall (1gains taxes on the sale of assets held in a Massachusetts business trust, or corporate trust, in

conjunction with its liquidation, the court made the interesting observation that although the 68. Clune v. Nor

nonrecognition of gain provisions of § 337 of the Internal Revenue Code are not available to property to the settle

corporate trusts under Massachusetts tax law, the prudent tax maneuver would have been to In Old Colony Tr.convert the corporate trust into a corporation by means of a merger or other restructuring in a the benefit of A am:reorganization qualifying as a mere change in form before the liquidation. years and pay over t

62. Whitney v. Whitney (1944) 317 Mass. 253, 57 N.E.2d 9l3. which would fall intwas still alive, the tr

63. Commissioner of Corporations and Taxation v. Second Nat. Bank of Boston (1941) The court held he cc

308 Mass. 1, 30 N.E.2d 889, discussed above. be could not exercis

64. Ryan v. McManus (1948) 323 Mass. 221, 80 N.E.2d 737.

162

69. § 36:37, at no.

71

CflAPTER36

any clause in the

apparently had aartridge v. Clary.and on her death':.cutors and trust-the father of E, A•ansaction was tofly considerationlout interest. Thele this case withwarning against

o swing back tot there was a life7ommissioner ofton, 63 and ignor-minated the tnist

; still the law andcts, but this can-

ik of Boston (1941)

mimous vote of all59, 364 N.E.2d 804.

'22, the holder of allo terminate the tnisteing reserved in theId that the traditional.sachusetts businessE.2d 30, 156 A.L.R.

se involving capitalcorporate trust, in

on that although theare not available towould have been toter restructuring in a

ik of Boston (1941)

TRUSTS AND TRUSTEES

F. Miscellaneous

§ 36:33

The complete merger of the legal title and the equitable interest in the

same person terminates the trust," but to constitute a merger the beneficial

interest must be vested, not contingent."

A trustee cannot terminate the trust by her own wrongful aet.87 Likewise, a

trustee who has the power to use principal as well as income has no right to

terminate the trust by arbitrarily paying over all the principal to the benefi-

ciary, when the trustee's purpose is merely to get rid of the trust rather than a

bona fide exercise of discretionary power.°

The question of the transfer of a trust to another jurisdiction is discussed

in a later section."

65. Cunningham v. Bright (1917) 228 Mass. 385, 117 N.E. 909; Langley v. Conlan (1912)

212 Mass. 135, 98 N.E. 1064.

66. Tifft v. Ireland (1930) 273 Mass. 56, 172 N.E. 865.

The rules pertaining to merger were held not to apply to terminate an active trust for the

support of an individual where the trustee still has specific duties to perform, in West v. ThirdNat. Bank of Hampden County (1981) 11 Mass. App. 577, 417 N.E.2d 991.

67. In Atkins v. Atkins (1932) 279 Mass. 1, 180 N.E. 613, the court said that where trust

funds become so mixed up with the trustee's individual property that it is impossible to trace

and identify them as entering into some specific property, the trust ceases. It would appear,

however, that the court meant what it said only in the context or following trust assets in

insolvency cases.

A trust cannot he terminated by abandonment. Webster v. Vandeventer (1856) 72 Mass.428.

In Boston Safe Deposit and Trust Company. v Seifert (1996) Suffolk County Superior

Court Civil Action No. 92-7312, 24 M.L.W. 1344, where the individual trustee purchasedproperty from the trust and then immediately resold it at a huge profit without the knowledge

or consent of the cotrustee or other beneficiaries, the court held that his conduct fell far shortof what was required of a fiduciary, and granted the cotrustee's motion for sumrnary judg-

ment directing that the profit be turned over to the trust. The individual trustee argued that the

conduct of the parties prior to the purchase and sale was such that the fiduciary relationship

had ended, thus terminating his fiduciary duties, but the court held that his actions were not

significant or positive enough to repudiate or otherwise sever or terminate the relationship,

citing Hill v. Hall (1906) 191 Mass. 253, 77 N.E. 831.

68. Clune v. Norton (1940) 306 Mass. 324, 28 N.E.2d 229 (trustee reconveyed the trust

property to the settlor); Boyden v. Stevens (1934) 285 Mass. 176, l88 N.E. 741.

In Old Colony Trust Co. v. Rhodes (1938) 299 Mass. 390, 12 N.E.2d 809, the trust was for

the benefit of A and his family, with power in the trustee to terminate the trust tiller seven

years and pay over the principal to A. He exercised this power. There was also some property

which would fall into the trust by another clause on the death of the testator's widow. As she

was still alive, the trustee executed an assignment to A of this property when it should fall in.

The court held he could not terminate the trust as to this latter property until he received it, as

he could not exercise his discretion in advance.

69. § 36:37, at note 32.163

72

TRUSTS AND TRUSTEES

260. § 2A, which proviiics for ae-year statute of limitations. Whenaction is brought agoilist a trustee,

.... cause of action Jibes not. accrue.:.:Itil the trustee replidiates the trust.,n,l the beneticia , has actual notice)f that reput • ti on. Constructiveknowledge is ' .sufficient.

In Doe . Harbor Schools, Inc., 44:la=ss. 245, 843 N.E.2d 1058 (2006)suit. for 'breach of fiduciary duty astude t against her counselo thecou . acknowledged that in c . es in-vojting the tort of breach of iduciarykltity, the three-year statu of limita-ti.ons is tolled until a aintilf has"actual knowledge" thr she has beeninjured by the fidu cry's conduct.Actual knowledge in this context,however, does not can that the plain-tiff is etititledrait until she under-stands the ea ..al connection betweenher injuriesiond a legally cognizable/claim aga• i st the defendant: rattle',i.he critici,tfl event that. starts the iiirAi-union.• period running is whe - theplaiif first becomes aware of factsgiv lg rise to her injury jA3N thedefendant.n. 18.

In Lyons v. Nutt, 4' i Mass. 244,763 N.E.2d 1.065 (2 2), sequel toSpinner v. Nutt, 41 l+lass. 549, 631N.E.2d 542 (1994)„ited in the hard-bound text, one f the trustees in-volved in the et ier case brought anaction against .he law firm that theSupreme ,Ja icial Court had previ-ously held x s not liable to the benefi-ciaries of •he trust because the atorneys ad no duty to them. T oplainti r in this case claimed tha thelaw m committed malpract' !e byfailing to advise the trustee low totake timely advantage of offer topurchase the trust's major asset. Itwas held that the action was time-barred because it was brought morethan three years after the plaintiff

§ 36:33

knew or reasonably should haveknown t1>tt he suffered appreciableharm a a result of the firm's coriduct,

ordance with the "digcoveryThe court went on tojhold that

tipbecause the plaintiflptinued his

torney-client relation with thefirm, the "continuing epresentationdoctrine" did not app to toll the stat-ute of limitations ecause that doc-trine does not ap y where the clientactually know hat he suffered ap-preciable her in as a result of his at-torney's co • uct. There was no in-nocent relj nce which the continuingrepresentation doctrine seeks toprotect

e Bratcher v. Moriarty,Don ghee & Leja, P.C., 54 MasyApp.C 763 N.E.2d 556 (2002 - wherele decedent's father who con not re-/cover under the wrongful ileath stat-ute because the decode s survivingwife was the only statu ry beneficiaryattempted to recover to funds neces-sary to cover the fu ral expenses andadministration ex enses from the lawfirm that repre• nted the survivingwife on the g,Yro eels that the firm owedhim a duty care which it breachedby not req ring the wife to use thefunds reen - ered in the wrongful deathaction to'pay these expenses. The Ap—peals ourt held that, under Spinnerv, N tt, 417 Mass, 549, 631 N.64 (1994), the law firm had dutyt the father. The wife held t wrong-ul death recovery as a sta tory trustfund for the benefit of e statutorybeneficiaries, and undo Spinner, evenif the father constit ed a beneficiaryof that statutory trust fund by virtueof the requireme that those funds beused to discha e the funeral bill andother estate r ministration expenses,his•hunt w against the wife and notagainst attorneys. To hold other-wise would place the attorneys in theposition of having conflicting duties.

F. TERMINATION, ACCOUNTING AND DISTRIBUTION

§ 36:33 Termination of trusts

n. 36.In Bongeards v, Millen, 440 Mass.

10, 793 N.E.2d 335 2003), because avalid trust, once created, cannot berevoked or altered except by the exer-

cise of a reserved power to do so, whichmust be exercised in strict conibrmityto its terms, the purported transfer ofreal property held. by a trust, by a deedfrom the donor's own name to her

53

73

36:33

daughter written after the propertywas already in the trust, did not termi-nate the trust and was invalid.

SETTLEMENT OF ESTATES

Page 155. Replace fourth paragraph:The existence and terms of a power of revocation are a matter

of construction."' A provision that the trustee shall pay the set-tlor the income and such portion of the principal as the settlorshall deem necessary for the settlor's comfort and support is nota power of revocation, and the settlor cannot terminate the trustby demanding the whole of the principal under a claim that sheneeds it for her comfort and support, when she does not intend touse it for that purpose." An unrestricted power of amendmentmay, however, be used to effect a revocation."

""In determining whether and theextent to which a power of revocationexists, the instrument must be read asa whole. Borden v. Humm, 70 Mass.App. Ct. 102, 872 N.E.2d 1.1.62 (2007).In Borden, parents had sold certainreal estate to one of their daughtersand her husband (the Humus), subjectto a side agreement that created aresulting trust in favor of parents"until such time as the sellers maydesire to have the same conveyed tothem or, in the event of the death ofthe survivor of the sellers, the buyerswill convey said lot to the estate of thesurvivor so that the same will becomean asset in said estate." Following thedeath of the first parent (the mother),the father entered into a terminationagreement with the Humms cancelingthe side agreement. After the father'slater death, his other daughterbrought suit seeking to have the realestate in question conveyed to father'sestate claiming that father, as thesurviving parent, did not. have thepower to terminate the resulting trust.Her view rested on the interpretationthat the power to reclaim the propertyhad to be the result of a joint decision,and that the power expired with thedeath of the first to die of the parents(since at that time there could no lon-ger be a joint decision). The courtnoted that the agreement simply didnot address the question of whetherthe power to reclaim the propertyexpired on the death of the firstparent. Accordingly, the court heldthat the trial court judge properlyconstrued the agreement to permit the

54

surviving parent to terminate theresulting trust•—whether by reclaim-ing the property or by canceling theside a...,:reement.

371.ovett v. Farnham (1897) 169Mass. 1, 47 N.E. 246.

"Scott v. Dane (1964) 346 Mass.784, 1.96 N.E.2d 195; Stahler v. Sevinor(1949) 324 Mass. 18, 84 N.E.2d 447.

Suppose the donor of the trusthas retained the income fbr her lifeand a general testamentary power ofappointment and has left the remain-der in default of appointment to issue.May she revoke the trust? She hasretained control of all beneficialinterests. She may alienate the incomeinterests whether or not there is aspendthrift clause. See a 36:38. Shemay cut oft the interests in remainderby the exercise of her own power ofappointment. The trend of the Mas-sachusetts cases appears to be towardpermitting revocation in such a case.See New England Merchants Nat.Bank of Boston v. Kann (1973) 363Mass. 425, 294 N.E.2d 390; Ware v.Gulda (1.954) 331 11,1ass. 68, 117 N.E.2d137. In the Kann case, the court ap-pears to sanction the making of equi-table adjustments by agreement of allparties in. interest (although the fail-ure of the charitable remaindermen toagree prevented the court from sodeciding). In the Ware case, the ruleestablished by Crawford v. Langmaid(1898) 171 Mass. 309, 50 N.E. 606,under which creditors were denied theright to reach trust interests payablein the discretion of the trustees to the

74

;TATES .'STS AND TRUSTEES

ltterset-ttlornotrustshed totent

thedm-the

169

188.nor•.1stifsofin-te.CISal

'1C!it

?r•

Ki:,r-clebtor, was overruled. It is dif-• to conclude that anyone other

:in the donor in the above hypotheti--zt: case would have any real interest

the trust property.in State Street Bank and Trust

v. .U.S., by I.R.S. (D. Mass. 1990)F.Supp. 1402, the court refused to

,;oin the Internal Revenue Service.,31 levying on trust assets to satisfy

donor's personal income tax defi-:ieacies, where the donor had retained;.he right to direct payment of currentinmme to himself and where the do-rz....)r's son, as cotrustee with the donor,

the power to direct the payment:,;:* principal.

47.Gershaw v. Gershfield, 52

§ 36:33

Mass.App.Ct. 81, 751 N.E.2d 424(2001), reaffirmed the well-establishedrule that, where the donor has fixedthe time for the termination of a trust,and where it is active and its purposesand objects have not been fully ac-complished and its early terminationwould not best accomplish donor'sintent, the trust cannot be terminatedbefore the time fixed by the donor.

n. 49.The court in Gershaw v. Gersh-

field, 52 Mass.App.Ct. 81, 751 N.E.2d424 (2001), refused to permit a trustto he divided into three separate trustsand then to allow the primary incomebeneficiary's share to be exhausted byregular distributions of principal.

Page 159. Insert the following new text after the second fullaragraph:

In the 1999 case of Steele v. Kelley,' the Appeals Court confirmedthat the issue .of termination of a trust, like any other matter re-lating to rights created by a trust instrument, including theextent of a trustee's discretion, initially is a question of law thatturns on the settlor's intention as reflected in the words of theinstrument.

"'Steele v. Kelley, 46 Mass.App.et. 7:12, 71() N.E.2d 973 (1999), reviewdenied 430 Mass. 1103, 714 N.E.2d.354 (1999), where the trustee wasgiven the discretionary power to decidewhether to terminate the trust. 'Thecourt also held that if any materialpurpose of the trust could still be ac-complished, the beneficiaries could notcompel its termination.

la. 66.In Trotola v. Tretola, 61 Mass.App.

Ct. 518, 811 N.E.2d 1037 (2004), Jo-seph was the sole trustee and Josephand Marlene were the beneficiaries ofa trust that held real property. Afterthey divorced, Marlene assigned herinterest in the trust to Joseph. ThenJoseph executed and recorded threesets of amendments and schedules ofbeneficial interests; the first declaredhimself and whomever he later desig-nated to be the beneficiaries, the sec-ond declared himself primary benefi-ciary and two others as contingentbeneficiaries, and the third declared

himself primary beneficiary and hisnew wife, Carolyn, and his daughter,Cathryn, as equal contingentbeneficiaries. The probatejudge heldthat when 14Iarlene assigned her inter-est in the trust to Joseph, there was amerger of the equitable and legal titlein the trust, the trust then failed andthe property became Joseph's free ofthe trust. The Appeals Court reversed,however, holding that because Josephsufficiently indicated in the documentsthat the property was to be held intrust, the doctrine of merger did notapply and the property was held to bein and subject to the trust at the timeof his death.

In a footnote, the court in Tretolaindicated that the merger doctrine willnot be applied if serious injusticewould result., or if the settlor's intentobviously would be frustrated. (CitingBogert, Trusts and Trustees * 129, at398 (rev. 2d. ed. 1.984).) A court ofequity will always prevent a merger topreserve any beneficial interest of theparties, to promote the purpose of

75